Dividend stock is the term for a stock which the
company pays dividends in large amount, say more than half of its net profit in
a given year, while on the other hand, the price of the stock is not too high
so that its dividend yield are greater than other stocks in general. Example? Bank
BJB (BJBR). Since the year 2007 to 2013, BJBR always pay dividends by an
average of 65% of its net income each year. For the book of 2013, the dividend
was Rp78 per share. With the price of Rp965 per share before the cum date, then
the dividend yield of BJBR was 965 / 78 = 0.081, or 8.1%. This figure is quite
large when compared with yield of blue chip stocks, which only 2 – 4% in
average.

In addition to the sector of construction which we’ve discussed last week, in
the last fe days I often receive questions (by email) about the prospect of
Kalbe Farma (KLBF), Tempo Scan Pacific (TSPC), etc., aka pharmaceutical stocks,
related to the government program that called Social Security of Health (Badan Penyelenggara Jaminan Sosial Kesehatan,
or BPJS Kesehatan, it’s more and
less similar to Obama’s Healthcare), which has been running since the beginning
of 2014. Then, after Jokowi sworn in as President on 20 October yesterday,
shortly afterwards he launched his program of 'magic cards', one of which called
Indonesia Healthy Card (Kartu Indonesia
Sehat, or KIS), which may make
you curious, how about its impact on the stocks of pharmaceutical in Indonesia
Stock Exchange (IDX). Well, before that, let us first discuss the theme of
'health' from the beginning.

If you are including those who are not too
affected by negative coverage by TvOne and MetroTV when the Republic of Indonesia
was led by President Susilo Bambang Yudhoyono, then you would be able to see
that over the last decade, or especially in the last five years (2009 – 2014),
Indonesia has experienced significant progress in terms of infrastructure
development. FYI, Indonesia is now one of the countries with the most number of
airports in the world, including international airports, where most of the new
airports were built in the last ten years. Today, tour and travelling is one of
the most promising business in the country.

In this sunny Thursday morning, I casually take
a look at the price of shares of the Bakrie Group. Andd.. Whoaaa.. Bumi
Resources (BUMI) seems like getting closer to the bottom price of Rp50 per
share! Because it is currently traded at Rp103 per share. Previously, several
other Bakrie-related stocks like Darma Henwa (DEWA), Bakrie Sumatra Plantations
(UNSP), Bakrie Telecom (BTEL), Bakrie & Brothers (Bakrie), until Bakrieland
Development (ELTY), they all had already reached the ‘dead’ level of Rp50 per share.
If we take a look back at the years of 2009 - 2010, the stocks of Bakrie Group
were so dominating the trading volume on the Stock Exchange, where people are
even more interested to see the movement of BUMI than Jakarta Composite Index (JCI)
itself. So this condition of course begs a question: What the hell happen???

PT Soechi Lines is a company that I myself only
heard its name recently after the company hold an IPO. However, the IPO may
be interesting because the company engaged in shipping, and we know
that the stocks in the marine sector continues to move up in
recent months, driven by positive sentiment arising from the plan and the
vision of the Government of Indonesia, under President Jokowi, to make
Indonesia as one of the 'axis of maritime' in the world. So the question of course, can we join the IPO?

If we talk about United Tractors (UNTR), then we
are talking about the biggest companies in Indonesia in two fields at once, ie heavy
equipmentss and coal mining contractor/services. UNTR is one of the ten largest
stocks in term of market capitalization on the Indonesia Stock Exchange
(fluctuate, sometimes UNTR out of the list if the stock price was down). UNTR
also has a history of a very solid performance in the long run. When the coal
industry began to flourish in Indonesia since the early 2000s, UNTR kept
growing into the second largest contributor of revenue (after the auto
business) of its parent company, Astra International (ASII). Yup, of ASII’
revenue of Rp150.6 trillion (about US$ 14 billion) until the third quarter of
2014, Rp40.8 trillion of which came from UNTR.

In my every training of value investing, I
always give an opportunity to the participants to ask questions related to the
material presented, either in the event or after the event (through email).
Some questions required short answers, and some others require long answers.
Here are some of them. Please check, you may have also had the same questions.

Bank Danamon (BDMN) became the first company on
the Stock Exchange that has released its financial statements for the period of
third quarter (Q3) of 2014/nine months of 2014. And the result? Well, since
early of 2014, BDMN is one of the listed banks whose management was not able to
deal with the negative impact of the increasing Bank Indonesia Rate (BI Rate),
which although the bank managed to increase the revenue, but the operating
profit and net profit fell significantly due to the increase in interest
expense, and the trend is still going on until now. Until Q3 2014, BDMN posts
net profit of Rp2.1 trillion, down 29.9% compared to the same period in 2013.

Soon, we’ll have another famous company in our
stock trading floor. PT Blue Bird, Tbk., and that’s all of the company’s name,
is the largest taxi company in Indonesia, as well as the most prominent in its
industry, so it was no wonder if the news of the IPO has triggered investor’s
curiosity. However, like any other ‘well-known goods’, the shares ain’t sold at
low prices, but between Rp7,200 – 9,300 per share, where the nominal value of
the shares is only Rp100 per share. The question is, of course, is it worth?

In one of his annual letters, Warren Buffett once
said this, 'We hope that you will stay with us forever (read: be a shareholder
of Berkshire Hathaway forever), and will not sell your stock just because you
worry about economic and political turmoil in the United States.’ Take a look
that Buffett said two words: the economy,
and politics. Buffett said the words
because, based on his experience as an investor, there are at least two things
that can make the American stock markets, including the company's performance
in it, decreased, ie the problems related to to the economy and political
situations, both in the national and global scale.

In last week article about when we, as
investors, should buy, hold, and sell our holdings (we call it portfolio
rebalancing), I said that you can buy certain stocks if there is an
extraordinary event that could occur at any time (so you would not need to wait
for the end of the month, let alone the end of the year), say if there are
certain stocks whose prices suddenly plummeted. Coincidentally, a few days ago there
was another 'extraordinary event', where the stock of BW Plantation (BWPT) suddenly drop from 1,000 in early September to
460, or lost more than half of its market value in a matter of weeks. Even
worse, the trading of the stock is now suspended!

One of techniques/strategies
in stock investing is related to how to manage the portfolio every some time in order to be back to be 'in
order’ after it was 'messy' before, by removing unproductive stocks/stocks are
tend to down, holding stocks that still has the potential to rise further, and
buy new stocks to replace the sold ones. The term for such strategy is the portfolio re-balancing. Portfolio
rebalancing is very important to do, whether you are a long term investor, or even
a daily stock trader.

Based on my experience every time I spoke on
investment training, one of the most frequently asked questions by the
participants is, how do we know whether a company's financial statements
present the actual figures (revenues, net income, etc.) or not? Or in other
words, what if the company falsified
the statements? Well, since this might be a question of many, then here we will
discuss it comprehensively. Here we go!

If you type the word 'Kedawung Setia Industrial' in Google, then you will
find interesting fact that this company, even though only a small company and
its stock is not liquid, but it is quite often covered by fundamental analysts/
investors, especially in terms of its low valuation. And indeed, with PBV of
only 0.4 times at the price of Rp369
per share, while the company's financial performance isn’t too bad, the shares of
PT Kedawung Setia Industrial, Tbk. (KDSI) is very attractive for bargain
hunters. And here’s the analysis.

Have you watch the movie ‘The Wolf of Wallstreet’? The film tells the story
of career of Jordan Belfort, a stockbroker
in United States (Wall Street) in the 90’s. Belfort was very good in convincing
customers to buy and sell certain stocks, which he obtained trading fee from it.
Because of the expertise, he was successfully established his own broker
company, Stratton Oakmont, and became very wealthy before the age of 30. But
the ending is quite ironic: Belfort got arrested for insider trading, which
caused losses of up to tens of millions of dollars of his customers.

After slightly dropped in May - June, in the last two months the Jakarta
Composite Index (JCI) continue to rise until closed at 5,199. If the uptrend
continues, it is only a matter of time before the JCI would break a new high (the
highest position of JCI is 5,251, which was reached in May 2013). In a bullish
period like today, almost all of the stocks gained significantly. However,
shares in the oil palm plantation sector declined about 10% (in average) in the
last two months, while their financial performance in the second quarter of
2014 was fairly good with growing net income. What's wrong?

In this Sunday, since my wife took our children to watch the ‘Agustusan’
(Indonesian term for a various of fun races in commemoration of independence
day), while I myself is less interested to join any races, so I stayed at
home, spending my time by reading any writings on the internet. In addition to
reading everything about the world of financial especially about investing in
the stock market, I also like football, culinary, and especially: History. If
there is a test in which I should mention the names of Emperor of the Han
Dynasty in China, then I would be able to answer it completely, ranging from
Emperor Gaozu as the founder of the dynasty, until Emperor Xian as the last. From
this, I got the idea to write this article, which hopefully can give you a
little inspiration.

Multi Indocitra (MICE) may not a well-known company both in the eyes of
investors and the public in general, but this company is a manufacturer of one
the most famous brand of baby needs in Indonesia: Pigeon, as well as cosmetics with the same brand. MICE also had had
a side business by making energy-saving lamps with brand 'Hori', but it seems
that the business was failed.

If you are googling the word 'Dollar Cost Averaging (DCA)' on the internet,
the definitions of the word may vary. However, my definition of DCA is,
‘Continuously buying a particular stock, little by little, with the aim to own
the shares as much as possible’. If you already own a sizable share, then what?
Well, you can just hold the stock. The profit you seek is no longer in the form
of rising price of your stock, but the annual dividends distributed by the company. When you own a particular
stock in small amounts, then the dividend may be too little. But a large
ownership of a company, of course, will produce large dividends.

Some time ago, I received an email that sounds like this, 'Dear Sir, I just
started to invest in stocks. Do you have any opinion about how much the ideal
amount of initial capital? Because, frankly, I am just a small investor with
fund of about US$ 1,000. I have heard that serious investors typically invest
in hundreds of thousands, even up to millions. Will I be able to compete with
those big guys?'

On this day, July 25, 2014, several public companies has released their
financial statements for the period of first half of 2014, either through the
website of IDX or newspaper. Unfortunately most of them recorded a
disappointing performance, if viewed from their negative growth of net income.
However there is one company that shows good performance with 30% of net profit
growth: PT Bukit Asam (PTBA). This
coal company may represent the overall performance of coal mining sector which
was begun to rise in 2014, after slowing down in the last two years. Prospects?

Frankly, I thought that after the presidential election on last July 9,
then the game is over and we as investors can back to our job to analyze the
stocks as usual, and no longer become a ‘political expert’. However, I was wrong.
Although the quick count results show that Jokowi win the presidential election,
but the camp of Prabowo, instead of giving up, they made several actions of
resistance, that makes the political tension to be more heated after the date
of July 9.

What was going through your mind when you hear the word ‘Chitose’? For me,
I immediately thought about folding chair
which can be found on the event of wedding, etc. And Chitose International (CINT) is indeed the most prominent
manufacturer of folding chairs in Indonesia. However, today CINT not only makes
folding chair, but also a variety of general furniture products to be sold to office
buildings, residential, hotels, restaurants, schools, until hospitals. In the
future, the company still has a number of business development plan, which will
be funded by cash obtained from its IPO in last June 2014.

After had difficulties in paying the interests and the principal capital
belonged to their investors for a few months, the authorities of law
enforcement finally intervened the ‘fraud case’ of Cipaganti Cooperative (Koperasi Cipaganti). The Police of West
Java set the status of suspects to Andianto Setiabudi, Julia Sri Redjeki, and
Yulinda Tjendrawati, all of them are primary caretakers of the cooperative.
Because the three persons are also members of the board of PT Cipaganti Citra
Graha (CPGT), in this case the president director, president commissioner, and
commissioner, the case caused the stock of CPGT to fall to 54, down more than
70% compared to its IPO price of 190, before then rebounded to Rp75 per share
as its current position.

In one of his annual letter in the 1960’s, Warren Buffett once said this, ‘Our
business is to buy shares at a lowest possible price, so when we sell it later
at a price that is not too high, we would still make a profit.' The example? In
this case in the Indonesian stock market? Well, I just found out a stock that is interesting
because of its low valuation. The stock is Bank BTN (BBTN).

A friend of mine once asked, ‘Dear Sir, do you know why Warren Buffett does
not like the stocks of technology? I mean, if he acquired Apple, Google,
Microsoft, etc., he might earned enormous gain in the long term.’ And I
answered, ‘Buffett said that he does not understand technologies. But I think
the actual reason is because he realized that this kind of business has high
risks. For example, between the year 1995 – 1999, there were many technology
companies established in the United States, including internet companies, until
occurred an event that known as dot com bubble. But after the bubble was burst,
almost all of the companies went bankrupt except Google and Yahoo.’

By definition, blue chip stocks are stocks that representing companies with
the following characteristics: 1. The company is large, 2. Have a good
reputation and the name (of the company) is well known to the public, 3. Have a
good financial performance, 4. Usually is the leader of its industry, and 5.
The trading volume (of the stock in the market) is liquid.

First Quarter 2014 was the period in which the financial performance of
most of the second-tier (or also called ‘second liner’) companies has declined,
if viewed from their net profit that fell over the same period in 2013. While
the opposite conditions experienced by large companies (which represented by blue
chip stocks), where their earnings increased. Either this is a cycle or just a
coincidence, but the poor performance of second liner companies has made their shares
dropped in the last two months. One of them is Gema Grahasarana (GEMA), in which
the company posted net profit that fell about 40%, and consequently the shares
continue to fall until Rp380 per share. But with the stock’s PBV that is only
0.8 times, is the price low enough?

If we look at the movement of Jakarta Composite Index (JCI) in the last few
months, where the index rose sharply on March 14, 2014, when Jokowi
officially run for President, and dropped dramatically when Prabowo gain
support from Golkar Party, then it is clear that the majority of stock market
participants (regardless of personal choice of individual investors) prefer
Jokowi as President. However, first you have to realize that the number of
investors in the Indonesian stock market was less than 500 thousand people, aka
very small compared to the total population of Indonesia, which reaches more
than 250 million. So even if all the stock market investors elect Jokowi, then
it's not a guarantee that Jokowi will win the election.

On numerous occasions with Mr. Lo Kheng Hong, he told me that there are at
least two coal stocks that are very attractive for investment because of their low
valuations. They’re Bumi Resources (BUMI), and Resource Alam Indonesia (KKGI).
For BUMI, well, I personally has a slightly different opinion. But for KKGI,
this stock is indeed interesting, and it's not because of the 'romantic story
in the past' in which KKGI had gave us big profit when it surged to Rp8,000’s per
share in early 2012, but due to its low valuation, its bright outlook, and its healthy
balance sheet. Okay, here we go!

About a year ago, in August 2012, I began to analyze the stocks in sectors
that were not so popular: Sector of retail for mobile phone products and
accessories, and vouchers (for phone credit). From several stocks in this
sector, such as Trikomsel Oke (TRIO), Erajaya Swasembada (ERAA), TiPhone Mobile
(TELE), Skybee (SKYB), and Global Teleshop (GLOB), it was ERAA that selected.
And ERAA indeed made considerable gain, whose the price of shares continue to
rise from 2,200, until reaching 3,500 as its peak in last May. You can read the
full
article here.

Four years ago, when I read the company's financial statements for the
first time, I assumed that the performance of property companies will be much
better than companies in other sectors. Because a property company selling the
houses, offices, apartments etc. that the prices are high, even reaching
billions of Rupiah (about US$ 100K) per unit, so that the company’s revenue was
definitely big. While for companies such as Indofood,
for example, how much the profit from selling Indomie at a price of Rp1,000 per
pack? (in the year 2009, the price of Indomie was still around Rp1,000 per
pack, or about US$ 0.1). From the appearance of the salesmen, we can see that
property agents usually wear suit, aka far more convincing than old woman with
pajamas who selling Indomie in grocery stalls.

A few days ago, the Government of Cyprus announced that it would gradually sell
their gold reserves worth 400 million Euros, as a part of the actions to rescue
the country's economy. And whether it had correlations or not, a few moments
later the price of gold on the New York Futures Market plunged to as low as of
US$ 1,351 per oz. If calculated from the peak position of US$ 1,908 in August
2011, the gold price had fallen 29.2%. Well, if viewed from the perception that
the Jakarta Composite Index (JCI) will typically drop by 20 - 25% from the peak
(when the bear period occurred), then it is the gold that experience its ‘bear
period’.

Today I received an email that sounds like this, ‘Dear Sir, I am a newbie
investor. Frankly, I am scared to buy stock, I'm afraid of losses. Moreover, I
read on the internet that stock investors will almost certainly suffer losses
in their first year because lack of experience. Is there any way that I could
immediately gain profit in stock without losing first?' Well, since this is
probably a common question of new or potential investors in the stock market,
then I made the article to answer it comprehensively.

Indofood Sukses Makmur (INDF), as you know, is the largest food company in
Indonesia, even among the largest in the world, with a variety of products
ranging from cooking oil, margarine, flour, instant noodles, snacks, syrups,
nutritious food, flavoring, milk, and sugar. Through its subsidiary, Salim Ivomas Pratama (SIMP), INDF is
also the largest plantation company in the world in terms of land area that
covers 483 thousand hectares. So yep,
INDF is a giant. But I was quite surprised when reading the company's annual
report, where I find out that INDF continues to expand to become larger. Lastly,
INDF has been expanding to China by acquiring China Minzhong Food Corp., a vegetable processing company.

One of the most important issues after Joko Widodo (Jokowi)officially run for President, is about his running mate (for vice president). And after several delays, eventually announced that the mate is Jusuf Kalla or JK. Coincidentally, if we see JK’ good
track record as a vice president of Republic
of Indonesia during the
period 2004 - 2009, JK is a figure that is desired by the stock market. As a result since last Friday and also continues to this day,
JCI rise to 5,000's positions. The
question is, of course, what's next?

Lately in the media there are news that Koperasi Cipaganti Karya Graha
Persada, or abbreviated as Koperasi
Cipaganti (KC) only (literally meaning Cipaganti Cooperative, or Cipaganti
Union), began having difficulties in paying monthly interest/yield to its
investors, and of course these investors began to worried. Some peope think
that a company listed on the Stock Exchange, namely Cipaganti Citra Graha (CPGT) is the same as KC, but it's not.
Anyway, let's learn more about this case, is it just another fraud thing?

Since listed on the Stock Exchange on February 22, 2013 at the price of Rp295
per share, the stock of Steel Pipe Industry of Indonesia or Spindo (ISSP), hadn’t
gained a penny but directly dropped.. and continue to drop until it touches 131
as its lowest point on January 2014, before then rebounded and currently closed
at 168. If you look at the business model of the company, which makes and sells
steel pipes, ISSP is not ideal for a
long-term investment as the company’s financial performance in the future can
be easily affected by the fluctuations in raw material prices, the weakening of
Indonesian currency (Rupiah), etc. However, if you look at the discounted price
of the shares, the company’s conservative management, as well as the company's
recent performance that is quite good, then ISSP is too good to be ignored. Okay,
here’s my review.

Some time ago I received a question email from a friend, which he asks, 'Dear
sir, in an article about Toba
Bara Sejahtra (TOBA), you stated that the net profit of TOBA for First
Quarter 2014 was US$ 7.7 million. But I see in the paper, the profit was US$
12.8 million. Which is right?' I could say, both are right. How come? Well, here’s
the explanation.

Toba Bara Sejahtra (TOBA) became the first coal company in the Indonesia Stock
Exchange which has released its financial statements for the period of first
quarter of 2014, and its net profit of US$ 7.7 million (profit attributable to equity
holders of the parent entity) cause the stock to be too attractive to be ignored,
because the profit grew doubled over the same period in 2013, and relfects ROE of
27.6%, quite delight for a stock that is currently valued at only PBV 1.3 times.

If you buy 100,000 shares of a stock at a price of Rp100 per share, worth a
total of Rp10 million, and the next day your shares rose 2% to Rp102 per share,
then what is your gain? Of course 2% multiplied by 10 million, yes? And the
result is Rp200,000. The next question, would you surely get the cash of Rp200,000? No. The
figure can still change at any time, along with the changes in the stock price.
If tomorrow your stock climb higher to 104, for example, then your profit would
be Rp400,000. Conversely, if your stock dropped to 99, then your profits will
instantly disappear and turned into a loss of Rp100,000.

Last mid-May, Facebook is officialy listing on the Nasdaq with ticker ‘FB’.
The Initial Public Offering (IPO) is touted as the largest IPO in history,
because the value was very large, ie US$ 16 billion or more. The expression
'the largest IPO in history' may make you curious, is that so? That the IPO of
FB is the largest IPO of all time? That's why I made a little research, and
here are the results.

Now we’re at the end of April, and that means all the public companies will
release their financial statements for the period of first quarter of 2014. In
fact, up to this writing, there are at least three companies that has released
the statements. They are Bank Danamon (BDMN), Bank Mutiara (BCIC), and Astra
Agro Lestari (AALI). The interesting one is AALI, which recorded Rp810 billion (about
US$ 80 million) of net profit, or jump more than doubled over the same period in
2013. On the other hand, if we glance at the price of crude palm oil (CPO) on
Malaysia Stock Exchange, the figure has been stable at RM2,600 per ton, after it
was dropped to RM2,200 per ton. Time for oil palm plantation stocks to rebound?

Bakrie Group is still one of the most controversial conglomerates in the
stock exchange, and it's not because one of the owners, Aburizal Bakrie, run
for the President. But because all of the listed companies of the Group has a
very ugly financial performance. To this day, there were at least eight companies
of the Bakrie Group which has released their financial statements for the period
of Full Year 2013. The following table is a summary of the performance of their
income, figures in millions of US Dollar:

After waiting so long, on April 9th, ​​Indonesian people finally held the
legislative elections, and as usual the results can be known shortly afterwards.
Based on data from the quick count, there are three winning parties of this
election, ie PDI-P, Golkar, and Gerindra. The cadres of the losing
party would say that this is just the result of the quick count, and that we
have to wait for the official count from the Commission of Election (Komisi Pemilihan
Umum/KPU). However, based on the experience of previous elections (including local
elections), the results of quick count will not differ much than the results of
official count, in which the top three above is not likely to change.

About a year ago, Bank Indonesia (BI) as the monetary authority of
Indonesia announced a rule related to minimum down payment (DP) of 20% for
purchasing of motorcycle, and 30% for car. Prior to that, finance companies were
aggresive in disbursing their loan, in which a buyer was able to buy a
motorcycle at a price of US$ 1,200 after paying US$ 40 only as down payment. BI
saw that this could provoke a bubble, so then they issued the rule of minimum
down payment as mentioned earlier.

In recent days, the local media are busy talking about a case of alleged
investment fraud by PT Golden Traders
Indonesia Syariah (GTIS), with an estimation of customer’s losses of about
Rp600 billion or US$ 60 million, and of course it is still not a small amount
of loss. But this case is the umpteenth time that happened in this country,
with an always-the-same-story: An investment fraud that promises huge profits in a short time. Actually
this case is not directly related to our investment in the stock, of course,
but I think that this is still important to be discussed to provide information
to people who may still lay about the investment itself. Okay here we go!

Greece has another story.
Yesterday the Government in the land of the gods have laid off no less than
15,000 civil servants, in order to save the budget. Beyond that, some media 'sentenced' two European countries,
namely the Netherlands and Italy, as the country that has also been following the Greek to fall into
the crisis. Such bad news? Of course. But miraculously, one of the world's major
stock indices,
the Dow Jones,
instead affected and down, it continues to rise and is one step closer to penetrate its new level at 13,000’s. Then how about the Jakarta Composite Index (JCI)? Same thing. When this
article was written, the JCI was at peak, ie above 4,000. An anomaly?

On November 19, 2012, Semen Gresik (SMGR)
announced a significant
corporate action, namely the acquisition of Thang Long Cement, a Vietnamese
cement company. Shortly thereafter, the stock of SMGR rose because of the news, until almost touched a new high of Rp17,000 per share, before then dropped to its
current position of 15,850. If we talk about the stock, then nothing could be discussed because it's pretty obvious the stock already overvalue, or at least cannot be said to be undervalue. But, let's try to learn the prospect of the company in the future,
especially after the above corporate action.

About a year ago, I wrote an article titled The
Sleeping Giant, where I say that even though until the third quarter of
2012, Krakatau Steel (KRAS) operationally still had a loss, but this company
has a lot of plans of business development that if the development goes well
and successful, then the company will make a huge profit. That is why the title
of the article was 'the sleeping giant', where I saw this KRAS like a sleeping
giant, that ready to get up and 'raging' at any time, as the steel market in
Indonesia has a bright future along with the development of infrastructure and
others.

For those of you who are already familiar with my style of investing, you probably
already know the reason why I discuss about this stock. Yep, Mitrabahtera Segara Sejati (MBSS) is too good to be ignored because of its low
valuation, ie PER 4.4 and PBV of 0.7 times at
a price of Rp1,050 per share, while there is
nothing wrong with the company’s financial performance. Until the full year 2013, MBSS had a net profit of US$ 39
million, representing a return on equity (ROE) of 16.3%, while its equity grew 14.4%.
Outlook for the future? Well, also no problemo.

The risk of loss in stock investing is an
integral part of the investing itself. Most investors, whether they are newbie
or experienced, usually aware of the risks, but they are rarely paying
attention to it. Every time I meet with fellow stock investors, they’re usually
only like to talk about potential gains of their investments, without giving
any word of the risk of loss that might be suffered. In essence, when an
investor started to invest in stock, then it is the gain that comes to his mind,
without any picture at all about how much the loss he may be suffered, or
perhaps more exactly, he did not want to think about it at all! But it's
perfectly humane, anyone willing to lose?

But in fact, one of the important keys for
success in the stock market (either in trading or investing, but we’re talking
about investing here) is the ability to measure the likelihood or risk of loss.
This capability is needed, so that you can take steps to minimize the risk of such losses.

A few days ago, the management of the Bank
Tabungan Pensiunan Nasional (BTPN) announced that Sumitomo Mitsui Banking
Corporation (Sumitomo) took over 15.7% stake of the Bank from the hand of TPG
Capital, at a price of Rp6,500 per share, or far above the market price at the
time, which was Rp4,300 per share. Thus, Sumitomo officially holds 40% stake in
BTPN, but the story is not lying there, but: Why was Sumitomo willing to
disburse funds totalling Rp15.2 trillion or about US$ 1.5 billion, to take over
40% stake in the Bank at the price of Rp6,500 per share, whereas the market
price of the share itself was only Rp4,300?

To understand this, perhaps we can return to the year of 2009 when I began
my investing career in the Indonesian Stock Market, of course with an extremely
small funds, which taken from my regular salary as an employee in a company.

Friday March 14,
2013, about 3.00 pm, the Governor of
Jakarta, Joko Widodo aka Jokowi, announced
to the media that he has been
officially run for president, in the 2014 presidential election to be
held shortly. Shortly thereafter.. the capital market responded to the news with great enthusiasm! Only one or two
minutes after the news announced, the Jakarta
Composite Index (JCI) skyrocketed to dramatically gained 3.2 percent! Or the highest during the year of 2014 so far.

Me myself on that Friday afternoon received many telephone, short messages,
BBM (you name it) that 'reporting' about the rise of the index, and at first I
did not really care about that, just as usual. However, when it was mentioned
that Jokowi is officially run for President, frankly I feel excited too.

There are at least two listed property companies in
the Eastern Region of Jakarta, precisely in the District and City of
Bekasi: Lippo
Cikarang (LPCK), and Kawasan Industri
Jababeka(KIJA). If LPCK more focus on residential
properties,
KIJA is selling the land plots of industrial estate to build factory, etc. And now,
the company we are going to discuss here is KIJA. Okay, here we go.

The history of KIJA began in 1989, when the Provincial
Government of West Java give permission to a consortium to manage a vacant lot in the area
of ​​Bekasi, to be used as an industrial area. The consortium was led by two
entrepreneurs named Setyono Djuandi Darmono and Hadi Rahardja, who became the founder of
a company that is established later, Kawasan Industri
Jababeka (KIJA). The word 'Jababeka' is a short for 'Jawa Barat Bekasi', which probably because the company obtained
its permit from the Government of West Java (Jawa Barat) Province, while the land is in the area of ​​District of Bekasi. While 'Kawasan Industri' means 'Industrial Estate'.

The industry of construction is identical to the concrete,
where if you want to build high rise buildings, highways, bridges, etc, you would certainly
need the concrete. And if Wijaya Karya (WIKA) is one of several major
construction companies in Indonesia, its subsidiary, Wijaya Karya Beton (WTON), is actually the largest concrete
producer in Indonesia, which has eight factories, six sales regions, and two
representative offices spread from Binjai, North Sumatra, to Makassar, South
Sulawesi. While their closest competitor, PT Adhimix Precast (not a subsidiary
of Adhi Karya/ADHI), only has four units of concrete factories.

Although WTON is already the largest concrete producer in the country, but
the opportunities for company to grow bigger is still wide open with the
implementation of the infrastructure development program by the Government of
Indonesia through the MP3EI (check
the word in google for further information), which have been proposed since
2008, and the implementation will continue until 2025. In fact, over the last
five years, the production capacity of concrete of the company is continuously
increased, from 1.1 million tonnes in 2009, to 1.5 million tonnes in 2013, with
an average utilization rate of 85% per year (which was meant, although WTON
production capacity continues to be increase, but the new capacity is almost
always get used directly). And of course, the income of the company for five
years also continued to rise steadily, from Rp1.4 trillion in 2009 to Rp2.6
trillion in 2013.

Bank BJB (BJBR) is one of the few listed
banks that have released its financial statements for the period of the third quarter of 2013. And like many
other companies that have released their statements, BJBR’ financial performance is quite good (Yep, if you notice, the companies who release their statements earlier are usually recorded good performance, although not always). But
perhaps, there are other points beyond its
financial performance that make this stock attractive for investment.

This BJBR, since it's IPO in July 2010 (we’ve had discussed it, here
is the link), it had been interesting because the valuation is very low at
its IPO price of Rp600 per share (I forgot the details of calculation, but the
price is undervalue). Either because of the low price or other factors, at the
time BJBR skyrocketted to 1,000 in just a few days after its first trading day,
and then continued to rise until hits the 1,770 level, recorded a gain of
nearly 200% in just four months.

In recent days, one of Bakrie Group stocks, Energi Mega
Persada (ENRG), again became popular
amongst the traders after rose from Rp70 to 100 per share, gained about 35% in less than a month. I personally do not care even if this stock rose to 1,000, because since 2009 I have decided to blacklist
the entire Bakrie stocks, including ENRG, and until now the decision has not been changed. However, as ENRG recorded a profit
of U.S. $ 214 million in the third quarter 2013, an increase of approximately
10-fold over the same period in the previous year, then you may assume that this stock is have an attractive fundamental because on the other side, its PBV was only 0.4 times aka low enogh. But is it so?

Compared to
other companies in the same sector in Indonesia, ENRG is a new company established in 2001, ie when the Bakrie Family decided to get into
the energy sector, in this case oil and gas (other than coal through the Bumi Resources/BUMI).
Armed with the ability of the family
in acquiring assets, in 2003 ENRG acquired its
first asset, RHI Corporation, which indirectly owns 34.5% stake in Strait of
Malacca Block,
which then increased to 60.5%. In 2004, ENRG again add an oil block to its portfolio, this time
Lapindo Brantas Inc., which holds 50% stake in Brantas Block in Sidoarjo, East Java. Also in 2004,ENRG held an IPO so then the company listed on the
Stock Exchange.

Last Friday, February 21, 2014, the Jakarta
Composite Index (JCI) closed at 4,646, so in year-to-date basis, the index has gained 8.7% during the year of 2014. Psychologically, some investors may confused at this point: Did the
JCI gained
too fast, so that later in the end it would fall, or it's just the beginning of another bullish period?
What if it later
successfully reached the 5,000 level like April last year?

As I had explained in the article entitled The
Spirit of ‘Fresh 2014’, the entire stock indices in
the world, including JCI, basically will continue to rise in the long term. But
sometimes the
rise is too early, so a downturn momentum is then required to ‘neutralize’ the market. So every time the stock index fell, you may call it as a ‘market correction’, aka to restore the JCI itself to a position that is supposed to be. At certain times, the
drop was just a little so it does not become a big deal. But at other times, the JCI could decline more
deep than
usual. Usually the higher the previous rise experienced
by JCI, then the lower the correction would be. Most people only pay attention to the market crash in the years of 1998 and 2008, without paid
attention to
that in previous years, the index has risen very quickly to make everyone had thought that buying
stocks is a quick and easy way to become rich.

Adira Dinamika Multi Finance (ADMF) became one of several companies that
has released financial statements for the period of Fourth Quarter of 2013, aka
the Full Year of 2013. And the results? Well, quite good! Its net income grew
significantly, ie 20.3%, while its equity also rose 19.6%. But the interesting
fact is, in contrast to the company’s well performance, the stock was continued
to sag in the last two years, from the peak of Rp13,000 per share to 9,000. An
opportunity for bargain hunters?

ADMF, as you might know, is one of the largest motor vehicle financing companies
in Indonesia, both two and four-wheeled vehicles. The company was founded by a
businessman named Theodore Permadi Rachmat in 1990, which the word 'Adira' is
derived from the combination of words of PermADI and RAchmat. In 2004, the
majority ownership of ADMF was acquired by Bank Danamon (BDMN), and since then
BDMN continued to add their ownership up to 95%. Because of that, of exactly 1
billion outstanding shares of ADMF, only 46 million shares that owned by public
investors, so consequently the stock became illiquid.

Jasa Marga (JSMR) is the oldest and the largest toll road operator in
Indonesia, which by the end of 2012, the company held 73% of the entire length
of toll roads in Indonesia. As a pioneer in the industry, JSMR also has a long
history, ie since the company operates the Jagorawi toll road, the first toll
road in Indonesia, in 1978. So when compared with some new private toll road
companies, JSMR is practically the most established one. But still, the
opportunity for company to grow is wide open. In 2013, JSMR completed the
construction of Tanjung Benoa toll road, Bali, not yet including several other
toll roads which scheduled to be completed within the next few years. Long-term
prospects?

The infrastructure of toll road (or highway), frankly, is one of the most
luxurious infrastructure in Indonesia. Residents of Jakarta and its surrounding
areas are fortunate because the city is surrounded by several toll roads, but
the story is totally different in other cities. In fact, of a number of toll
roads operated by JSMR, including those that under construction, only two of
them that located outside the Island of Java, namely Belmera toll road (Belawan
- Medan - Tanjung Morawa) in North Sumatra, and Tanjung Benoa toll road in Bali.
While the other toll road companies, they are also operating in Java, except
Bosowa Group that operates the Makassar toll road, South Sulawesi.

One of the
'natural problem' in investing is the lack of certainty about the future, where
even a very well established company could stumble on particular issues, having a bad financial performance,
or even bankrupt. That's why in investing, the decision to place all available funds in a single asset/stock
only, is not recommended, no matter how good the stock was. An investment policy to place the fund into two or more stocks, that’s what we called diversification. The question is, how do we do it?

Diversification is basically aims to reduce the risk of loss. If you use
all of your funds to pick one stock only, then if it was a wrong stock, whether
it's because of fundamental change or it was wrong from the beginning, then the
value of the losses can be very large. However, if you spread the funds at ten
different stocks, then it is virtually impossible that all of those stock were
the wrong choices. Even though you are still lay about investing, there will at
least one or two stocks that successfully generate profits, and it certainly
reduces the risk of loss that may occur.

One method to analyze the movement of the Jakarta Composite Index (JCI), is
to compare it with the movement of stock indices in other countries. That's why
you must be familiar with several well-known indices such as the Dow Jones,
Nikkei, Hang Seng, etc. Around the world, there are lot of stock indices, so you
can not read them all. But here are some list of prominent stock indices in the
world.

In the article of two weeks ago, I mentioned that Lo Hong Kheng is a
contrarian investor, which he did what other people don’t, like buying stocks
that most people regard it as junk. Well, based on my own experience, the term
'contrarian' is actually interesting, and we will discuss it here.

By the term, contrarian means 'against'. Investopedia defines the strategy
of contrarian as a style of investing which is against the direction of the
market, by buying assets/shares that have poor fundamentals, and sell it later
when the company’s financial performance becomes better (at a higher price, of
course). The rationale is that we can only buy stocks at a really discounted
price, if the company itself had poor performance, or if the stock market was
down. However, since the stock market does not go down every day, then in the conditions
of sideways or bullish market, the option to buy stocks at low prices is
limited to stocks with average or even poor fundamentals. Because if we want to
buy a stock of well-known companies with brilliant financial performance, then we
would likely have to pay at premium
price, ie the price that reflects high PER and PBV, and it's certainly not
in line with the concept of value investing.

I found this stock, Astra International (ASII), when I was doing the routine screening
job to find good and undervalue stocks. The name of ASII is certainly familiar
to any of you, but I myself had forgotten the last time I hold this stock.
However, based on several considerations, ASII at this point might be ideal as
an investment choice, especially for those of you who like blue chip stocks
with high liquidity.

ASII is the largest conglomerate in Indonesia, with a total of 178
subsidiaries and 191,000 employees as of September 2013. As a conglomerate,
ASII engaged in diverse business sectors, namely automotive, financial
services, heavy equipments and coal mining, oil palm plantations, information
technology, and infrastructure and logistics. The latter may be unfamiliar, but
ASII is also has a subsidiary in the field of toll road operators, car rental
services, water treatment, fuel terminals, and ports. Until the third quarter
of 2013, ASII earned Rp5.6 trillion of revenue from the business of infrastructure
and logistics, or greater than Rp1.5 trillion of revenue from the information
technology (through Astra Graphia/ASGR).

I’ve been watching the stock of Gajah Tunggal (GJTL) for a long time, ie
since about 3.5 years ago when the price was still in the 400s. At the time,
the performance of this tire company was recovering after the global crisis in
2008, with a net profit of Rp905 billion in 2009, compared to a net loss of Rp625
billion in the previous year. The slick performance then continues in subsequent
periods, and of course the stocks continue to rise until GJTL had briefly reached
3,400 in mid-2011. But since then GJTL kept dropping, and now it is in a
position of 2,150. Is it because its performance is not good anymore? Probably
not, because until the third quarter of 2012, GJTL still recorded an increase
of net profit of 31.4%, or still quite good, and its ROE was still maintained
at the level of 20.4%.

PER of GJTL at its current price, based on its latest financial statement,
is 7.2 times, aka relatively low, so of course it is quite interesting
especially because the trend of the stock movement in the last month appears to
have started up again. So how is the outlook? And more importantly, what was
the cause of the declining of the stock before? Well, the answer may be related
to the company’s policy in managing its debt.

If the following question is asked to the people, 'What is the infrastructure?’,
the answer would usually, 'It is the highway, bridges, airports, etc.' But in
fact, the concept of 'infrastructure' is much broader than that. According to
wikipedia, the infrastructure is (I’ve simplified the sentence) physical and
organizational structures needed for the survival of a community or a company.
In other words, the infrastructure is facilities and/or services required by an
economic system to work properly and optimally.

Therefore, the type of infrastructure can then be divided into two:
physical and organizational. Physical infrastructure is like roads, bridges, ports,
etc. While the organizational infrastructure is usually associated with the
government policy, if infrastructure in question is related to the country's
economic activity, or management policy, if infrastructure in question is
related to the company's economic activity. For example, tax policy, subsidies,
capital, asset management, consulting etc. Yeah, the so-called 'subsidy' is
also an infrastructure, because it is a facility provided by the government to fulfill
the people’s needs.

If you type the word 'Saratoga' in Google, then you’ll find out that it is
the name of a county in the state of New York, USA. But inIndonesia, Saratoga is
better known as the name of one of the largest investment firms in the country,
owned by prominent businessmen, Edwin Soeryadjaya and Sandiaga S. Uno. A few
months ago, the company with the full name of PT Saratoga Investama
Sedaya was rumored to set up an IPO in 2013. If the process is going
well, Saratoga will reap US$ 200 million from its IPO, or some say
US$ 500 million.

Saratoga’ IPO is obviously interesting to be noted, as they would be the
first private equity firm that listed on the Indonesian stock exchange, and
also because they are a quite large investment company, with assets under
management (AUM) of approximately US$ 2 billion. Saratoga is the
parent of several large public companies that have listing on the market
before, such as Adaro Energy (ADRO), Tower Bersama Infrastructure (TBIG) and
Provident Agro (PALM). Saratoga is also the parent of some private
companies, as follows:

There are some interesting points when I learned the records of Indonesian
Trade Balance (exports and imports) for the period of full year 2012, which
released by the Central Statistics Agency (BPS), in early February. The points,
the import value of iron and steel for the year 2012 had increased
significantly, specifically 18.2% compared to the year 2011. Similarly, the
import value of goods of iron and steel also rose 36.8%. For other goods that
also contain iron and steel components, such as engines, electronics,
automotive products, and aircrafts, those import values were also significantly
rose between 15 - 30%.

In fact, the value of Indonesian imports as a whole (including oil and gas
imports) had increased by only 8.0%. That mean, Indonesia's need for iron
and steel, including its derivative products, has increased substantially in
the last year, including the need for iron and steel for construction and
infrastructure projects. The import value of iron and steel and their derivative
products in 2012 had covered 40% of the total import value of Indonesia,
an increase compared to 37% in 2011.

In 2006, David Bonderman, the boss of the
largest private equity firm in the world, Texas Pacific Group (TPG), visited
Indonesia to seek investment opportunities, along with a
young man who was 30 years old, Patrick Sugito Walujo, an owner of a local private equity firm, Northstar Equity Partners.
Bonderman and Patrick previously had known each other when Patrick worked for
Goldman Sachs in New York. After several meetings, Mr.
Patrick had convinced Bonderman that he was the right partner for TPG to invest in Indonesia. So, they both later
founded Northstar Pacific Partners, a holding company that is used to establish or acquired several companies, notably Bank BTPN (BTPN), and Bukit Makmur Mandiri Utama (BUMA), which
is listed on the Indonesian stock market/IDX through its parent
company, DeltaDunia Makmur (DOID).

A few years later, the investments started gaining profits. The most successful investment is probably BTPN, which has now become one ofbanks with the best performance in the IDX. But how about DOID? Well, we could say that Mr. Patrick is a little slipped in DOID, as until the third quarter of 2012, the company was still recorded negative
performance with a net loss Rp353 billion, up significantly from the previous
year amounting to Rp12 billion. If only DOID was able to record the good performance just like Bank BTPN, then it was not impossible
that the name of Patrick Sugito Walujo would appear in the list of Forbes Magazine, as one of the 40 richest people in Indonesia.

After suspended long enough, the trading session of the stocks of Garda Tujuh Buana
(GTBO)has opened last Monday, and the stocks were successfully gaining 9.6% to 4,275 position. It was a bit surprising actually, as usually when a stock was suspended due to someproblem of the Company (in
case of GTBO, the problem is related to its ‘magical’ financial
statements), then when the suspension isreleased, the stocks would go down.
However, on the other hand there are also some opinions that say that there is
nothing wrong with the financial
statements (FS) of GTBO,
so the stock price is still reasonable, or even
undervalued. Anyway, let us check the company's fundamentals.

GTBO established in 1996 in Jakarta, with
interest in coal mining. The Company obtained its first-and-only mining concession in 2001,located on the Island of Bunyu,
Bulungan District, East Kalimantan Province. Later, after long time of exploration, the mine started itsproduction in 2010, so that year was the first year the Company
generated revenue and profits. By the end of third quarter of 2012, GTBO
has produced a total of 3.5 million tons of coal, and the remaining coal reserve are still abundant enough, ie 91.9
million tons.

The date of 12-12-12 (December 12th, 2012)
might mean good luck for some people, but not for investors who hold the shares
of Unilever Indonesia (UNVR). On that day, the stock suddenly
dropped from 25,950 to 23,150 positions. A day later, the decline continues to
position 20,350, so overall, UNVR had tumbled 27.5% in just two days. It was a
very great decline, given that UNVR was not a penny stock, but the third
largest company on the Indonesia Stock Exchange (IDX) in terms of market cap
(before the drop, now it is the eighth largest, after Bank BRI/BRI). Bloomberg
called the decline as the worst for stock in the last twelve years.

The decline wasn’t without cause. On December
12, the company announced an affiliation deal with its parent company, Unilever
BV (UBV), a company from the Netherlands. In such deal, UNVR plans to
increase royalties on trademarks, licensing of technology, and management
services to the UBV, from the previous 3.5% of the total turnover (revenue) per
year, to 5.0% in the year 2013, and will increase to maximum of 8.0% in 2015.

One of the difficulties experienced by investors when the Jakarta Compiste Index (JCI) was high, is to find stocks that are still undervalue. Well, the easiest solution is
to wait until later the JCI was down. But sometimes, waiting is just boring.
That's why I check back some stocks I ever had in the past, which at this point
I've had it 'forgotten'. Who knows, any of them could still be collected, or at
least could be considered again. As a result, I found two stocks that seem
quite interesting. They are Resource Alam Indonesia (KKGI), and PP
London Sumatra (LSIP).

For KKGI, I have had noticed and had the stocks since November 2010, or
about two years ago. At the time, if you still remember, the stock was just
gained significantly from 900's to 1,700's. A friend of mine asked me to
analyze it, and the results, I found that this small coal mining company had a
very good performance, while its valuation at 1,700 was still very undervalue,
so I immediately bought it. KKGI itself was previously had not noticed by
investors because it was not liquid, because the number of public stocks of
KKGI before stocksplit was only 92 million pieces. After the company did a
stocksplit in a ratio of 1:4 in March 2010, the KKGI shares of public were
split into 368 million pieces, and began actively traded. And along with the
increase of liquidity, KKGI slowly but surely began to rise.

Liem Sioe Liong aka Sudono Salim, as you know, has passed away on June 10,
2012 yesterday, at the age of 95 years (or 96 years less one month). Although
he’s gone, Uncle Liem, as he was usually called, will always be remembered as
the founder of one of the largest business groups in the history of Republic of Indonesia,
the Salim Group. As a tycoon, there are so much lessons to be
learned from the figure. A friend of mine once said, "Everyone knows how
Uncle Liem had working extremely hard in building his business empire. He is a
perfect example for anyone who wants to succeed in pioneering a great business
from absolutely zero.”

Uncle Liem (to be simple, let’s make it ‘Liem’ only) was born in the
District of Fuqing, Fujian Province, China, in 1916. At that time China was
in a continuous conflict and war with the Japanese, so that little Liem and his
family had never live in peace as farmers. This encouraged Liem’ older brother,
Liem Sioe Hie, to seek overseas for a better life, and the destination was to the
south, to a town named Kudus. In 1938, at the age of 22 years, Liem then
followed his brother. The sailboat carrying him successfully landed in Surabaya,
East Java, and four days later Liem’ brother found him and then took him to the
town of Kudus, Central Java.

Some years ago, a mobile phone or handphone or cell phone, was a device to
call and send SMS, that's it. But along with the development of technology, now
people could use his cell phone to take pictures, play video clips, send
pictures, browse the internet, and any other functions like a computer. Cell
phone is no longer just a communication device, but a gadget. And for some
people, especially teenagers, it is a matter of pride to have the latest gadget
which is in trend, so cell phone is now a fashion item that is have to be
updated after some years or months. While for investors and businessmen like us
all, that behavior is an opportunity.

In Indonesia, the trend of cell phone brands is often to change. In the
beginning of 2000’s, some brands like Nokia, Ericsson, and
Motorola were the market leaders, before then a newcomer, Research in Motion
(RIM), had beaten them all with its new generation of cell phone, which called Blackberry
(BB) smartphone. And now, the position of BB is threatened by Apple’s
iPhone, Google Android, and Samsung. Going forward, some analysts has predicted
that Samsung would become the next leader in the cell phone and gadget
industry, which at this time Samsung has successfully popularized a new gadget
after smartphone: Tablet PC. In the first half of 2011, the brand of Samsung
Galaxy Tab was the market leader of tablet PC with a market share of 60%,
followed by Apple's iPad.

What industry that is most immune to the turmoil of economies both
nationally and globally? The answer is of course, the consumer goods
industries, including food and beverage industry. Rupiah may fall, JCI may
decline, but people will always need to eat and drink. That's why for most
investors in the IDX, they have a policy that keep them to hold at least one
stock of consumer goods companies, with the expectation that the stock would
remain stable despite other stocks fall. Then, Tiga Pilar Sejahtera Food (AISA)
is may considered as one of it.

AISA is a food company with a long history. The story began in 1959, when a
businessman named Tan Pia Sioe established a corn vermicelli
factory in Sukoharjo, Central Java, with the brand 'Cap Cangak Ular'. In
1978, Mr. Tan died, and the business was handed over to his son, Priyo
Hadi Susanto. In 1992, PT Tiga Pilar Sejahtera (TPS) was
formally established, and the company was handed toStephanus Joko Mogoginta which
became director of the company, while Mr. Priyo remains in control as a
commissioner. There is no information about whether Mr. Stephanus is the son or
nephew of Mr. Priyo, but he is the grandson of Tan Pia Sioe.

Bakrie strikes back! That's my first impression when I read the news that
Bakrie Group, through two of its holdings ie Bakrie & Brothers (BNBR) and
Long Haul Holdings Ltd, submitted a proposal to the management of Bumi Plc to
buy back shares in Bumi Resources (BUMI) which held by Bumi Plc, at
a value of US$ 278 million. However, BNBR and Long Haul won’tt buy all of the
shares, but only 18.9%, so that Bumi Plc would still holds 10.3% stake in BUMI
(because Bumi Plc is currently holds 29.2% stake BUMI). On the other hand,
Bakrie will also divest its 23.8% stake of Bumi Plc, in exchange for the
remaining 10.3% shares of BUMI which mentioned earlier. So, if the process goes
well, then before Christmas this year, Bakrie will no longer have interests in
Bumi Plc, and Bumi Plc will also no longer a shareholder in BUMI.

And how about Berau Coal Energy (BRAU)? Bakrie was also offered
to buy back 85% stake of BRAU which held by Bumi Plc, at a value of US$ 947
million. So if the proposal is approved, Bakrie would spend more than US$ 1.2
billion to get out of the ‘takeover trap’ of Bumi Plc, or in this case,
Nathaniel Rothschild .

On 2 July, Alam Sutera Realty (ASRI), a property developer in the area of ​​Alam
Sutera, Tangerang, Banten, announced that the company has acquired a company of ​​tourism
management for the Garuda Wisnu Kencana (GWK) Cultural Park, Bali, with a value
of Rp738 billion (which later rose to Rp813 billion). For ASRI, the purpose of
this corporate action is to diversify the company's business activities, where
ASRI now has a tourism business. But the corporate action was responded
negatively by investors, which ASRI’ stocks was dropped to position 455,
although later gaining again to position 480.

The GWK cultural park is located in Tanjung Nusa Dua, Badung District, Bali Province.
The main attraction of the park is a super-size statue of Lord Vishnu riding a
Garuda. The high of the statue is 145 meters, and the wide is 64 meters.
However, despite the construction of the statue was started since long time
ago, ie year 1997, the statue has not been completed until now, but only parts
of it, namely the head and chest of Lord Vishnu, the head of the Garuda, and
the hand of Lord Vishnu. There is no clarity about when exactly the statue will
be completed 100%, which is probably has made most investors thought that ASRI
was made a mistake about this GWK, because GWK is actually not ready to operate
as a tourist area.

The industry of car sales in Indonesia is always interesting, as people
from the upper and middle class is, almost certainly, to have at least one car
in their garage, and they are routinely replace their car with a brand new one
after some years or months. In the past, the most popular car brand in Indonesia was Toyota,
and it still is. But recently, there are some brands of cars that were
previously less known to the public, now it can easily be found on the roadway.
One of them, Nissan, with its top types, such as Nissan Juke,
March, and Grand Livina. Who holds the Nissan brand in Indonesia? No, it
wasn’t Astra International (ASII) or one of its subsidiaries, but Indomobil Sukses Internasional (IMAS).

IMAS is a business unit of Salim Group in the sale of vehicles of four wheels
or more (cars, trucks, etc.). Some of the brands held by the company are
Nissan, Audi, Hino, Renault, Suzuki, SsangYong, Volvo, Volkswagen, and most
recently, Infiniti (Nissan's premium brand, such as Lexus of Toyota). For the
Volvo brand, IMAS is also sell a variety of heavy equipment (so IMAS is also a
competitor to Intraco Penta/INTA, that sells heavy equipment with the same
brand). In addition to selling cars and heavy equipment, IMAS has also a number
of subsidiaries in the field of automotive financing, motorcycles sales, car
rent, spare parts production and distribution, as well as a small-scale mining
contractor company.

Bisnis Indonesia newspaper had once interviewed Aburizal
"Ical" Bakrie, a former chairman of the Bakrie Group (now Bakrie
Group is led by Nirwan Bakrie, Ical’s younger brother), in the year 2010 in
order to Bisnis Indonesia 25th anniversary. In the
interview, the reporter asked the question, 'How could the Bakrie Group through
Bumi Resources (BUMI) has managed to take over Arutmin and Kaltim Prima Coal
(KPC)?' And Ical said, 'At that time there was the opportunity, so that we immediately
grabbed it. About the money, we would take care of it later.'

As you are already know, BUMI took over 80% stake in Arutmin from BHP
Billiton, an Australian mining company, for US$ 148 million, in 2001. Two years
later, ie in 2003, BUMI once again acquired a coal company named KPC from
Beyond Petroleum (BP) and Rio Tinto, at a value of US$ 500 million. In the
interview with the Bisnis, Ical said, 'We bought Arutmin and KPC without cash,
because in 2001 we were in bankruptcy and did not have money at all, because of
the monetary crisis in 1998.'

Bumi Resources (BUMI) continued to drop lately, but
that does not make it less attractive in the eyes of most of the traders and
investors. In fact, some investors are actually started to take a look at this
stock, with their own reasons. On the other hand, those who hold BUMI from its
upper price are still confused to make choices that are equally difficult: Do I
have to hold it still, or just sell it off, which it was meant to realize the
potential losses?

BUMI recorded revenues of US$ 1.95 billion in
First Half 2012 (1H12), up 8.6% from US$ 1.79 billion in 1H11. However, like
other coal companies, BUMI recorded a higher increase in its costs, so the
operating profit was down from US$ 461 to 239 million. At this point, the
numbers are still normal. But as the company suffered losses due to derivative
transactions, foreign exchange, and the divestments in associated companies,
then BUMI eventually recorded a minus profit, namely comprehensive net loss of
US$ 327 million. It's interesting, because in its cash flows, BUMI recorded US$
144 million of net cash gain from its operating activities, grew nearly
three-fold from US$ 53 million in the same period of previous year.

For those of you who've read this blog for a long time, you probably know
very well that Bumi Resources (BUMI) is the one of the stocks that I would NOT
recommend. The reason? No, not because I've been loss on the stock, because I
never had it. But because, when I was getting into the stock market for the
first time in 2009, BUMI is a stock with big zero fundamentals with very large
debts and poor earning powers, but oddly owned by many investors, not only
local retailers but are also foreign fund managers, and at the time BUMI was
practically the most popular stock
in the Indonesian Stock Exchange. And this was really disturbed me: What’s
wrong with you people? How could you choose this stock as your favorite
investment???

However, over time, investors are eventually realize that they are not
going to gain anything from BUMI, and the stock slowly but surely continue to
fall. In the end of 2009, the Jakarta Compsite Index (JCI) closed at 2,534,
while BUMI closed at 2,425. And now? When this article was written, JCI was in
a position of 4,391, or has risen 73.3% in four years. While BUMI? It plunged,
not to 1,000, or 500, but.. 300's already! If in the last year the people were
still confident to say that BUMI will not follow the footsteps of its brothers
to become a member of club of ‘gocap’ (an Indonesian term for stock at the
price of Rp50 per share, the lowest possible price in the exchange), now they
began to have doubts. The term of 'stock of
a million people' as BUMI’s nickname was already long gone, and the stock
is no longer a favorite, even for speculators.

In recent days, there are some media which reporting on the amount of debt of the Bakrie Group, which was already in an alarming stage, or at least that’s what they said. There is also an article that says that the nomination of Aburizal ‘Ical’ Bakrie as the President of Indonesia is indicated
as an attempt to save the Bakrie Group of bankruptcy due to debts. An attempt
to drop the Bakrie-related stocks? Probably not, becausethe stock of Bumi
Resources (BUMI) and his brothers has already plunged
since the beginning.

If we considering that since many years ago, Bakrie is always have a
bunch of debts, and this issue is somehow suddenly linked with the nomination of Ical as President, then the story about Bakrie’ debts is probably has less to
do with the business, but rather to politics. Apparently, there is a
person who are upset after he was alleged to be involved in case of tax evasion, and
also had being called by the
Commission of Corruption Eradication (Komisi Pemberantasan Korupsi/KPK), even though
only as a testifier. Yep, you certainly already know who the person is: Hary Tanoesoedibjo, the owner of Bhakti Group.
Some time ago one of the group’
subsidiaries, Bhakti Investama (BHIT), had reported on tax fraud (I don’t know the details of the case, but the main point is about taxes). Even for politics
nonexpert like me, it was clear that the news about the tax case is
related to the joining of Mr. Hary to Nasdem
Party, because the news is only heavily blown by a single TV station only: TvOne, which belonged to Bakrie Group, where Ical as
the patron of the Group is also the leader of Golkar Party, one of main political competitor of Nasdem. So now, after the tax fraud news began to evaporate by itself, it is Mr. Hary’s turn to launch a counter attack, as he is also have several TV stations.

In fundamental analysis, I usually use a single indicator to find out
whether the company is already well-established or not, ie the company's retained earnings. To put it simply, if
a company has a large retained earnings, which is the accumulation of company’s
past earnings, then the company is well established as it can be seen from its
accumulation of profits. For example? Kalbe Farma (KLBF). In the third quarter
of 2013, KLBF had the retained earnings of Rp7.6 trillion, versus the paid
capital of only Rp508 billion. This means that the KLBF’ shareholders paid
Rp508 billion for the company’s capital, but so far the company's accumulated
profits has been far greater than the paid-up capital itself.

That's why if you notice - the company whose shares are categorized as blue
chips, which on average is already well established and settled, their retained
earnings are usually large. The following data is the value of retained
earnings compared to the company's paid-up capital, from the ten largest listed
companies on the Indonesia Stock Exchange. Note that if these companies never
paid dividends during their life, or paid but in a much smaller value, then the
value of their retained earnings would be much greater.

In your opinion, what are the main commodities of Indonesia? Is it coal? Or
crude palm oil (CPO)? Both are correct, but there is another commodity that the
value of its export is greater than both coal and CPO. And if you still remember,
we've been studying this thing ever since we were still in elementary school.
Yup, that commodity is oil and gas.

Based on recent data from the BPS (Badan Pusat Statistik, the central bureau
of statistics of Indonesia), in the period of January to November 2011,
Indonesia had exported oil and gas worth US$ 37.7 billion. This figure is
greater than the export value of coal and CPO, which were US$ 24.7 and 19.7
billion respectively. In detail, the oil and gas export of US$ 37.7 billion is
consisted of US$ 20.8 billion of gas, US$ 12.4 million of crude oil, and US$
4.4 billion of processed oil.

Some time ago, I met and discussed with
a friend who is a senior investor. Yep, I tell you, the best thing of having a blog like this is that we
could meet
those who are senior investors, so we can learn a lot from
them. And I
think, the opportunity to learn is
the most valuable investment, rather than stock investing itself.